Gold Vs. the S&P 500

Here’s a look at how gold has done against the S&P 500:

Here’s the same graph but I divided the two numbers (S&P 500 by gold):

On the day of the inauguration, exactly four months ago, the ratio slipped below 1.0. The ratio has previously bounced off 1.0 on November 20. Since the inauguration, it’s closed above 1.0 only once and that was on April 17 which was the day of Citigroup‘s (C) **cough** “earnings” report.
Interestingly, the S&P has stayed roughly even with gold over the past few weeks which puts the rally in a different light.
My view is that we’ll test 1.0 again. If the market likes what it sees, then we might move much higher.

Posted by Eddy Elfenbein on May 20th, 2009 at 12:42 pm

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